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More bodies are being found as police and firefighters continue "their lifesaving mission, going block-by-block and door-to-door in the areas devastated by the hurricane", Bloomberg said on Thursday.

With about 650,000 people still without power in New York, Bloomberg said the city would start handing out food and water and that National Guard and police would go into high-rise buildings to help the elderly.

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The Con Edison power company said some New Yorkers would have to wait until November 11 before electricity is restored.

National Guard troops helped rescue people trapped in flooded homes across the Hudson River from New York in Hoboken. They had rescued 2000 people in New Jersey in two days, Defense Department spokesman George Little said.

About 650,000 people still without power in New York. Photo: Getty Images

Some 1.8 million people in New Jersey were still without electricity three days after the storm and fuel shortages were becoming critical, with huge queues of cars at the rare service stations open in the state.

About half of service stations in New Jersey and the New York region had closed down becasue of power cuts or fuel shortages, officials said.

A skeleton service started just before dawn and trains were quickly packed. Trains were to be free on Thursday and Friday. "It is not comfortable but it is a huge relief to get moving again," said commuter Dave Stetman.

On Wednesday, in a bid to avoid gridlock, Mayor Michael Bloomberg said that until Friday cars entering Manhattan must carry at least three people. Police set up checkpoints at bridges and turned back hundreds of cars.

Con Edison said that more than 200,000 Manhattan customers blacked out by an explosion at a substation would have power by Saturday morning.

But it said 100,000 cases of trees and other objects bringing down powerlines had been reported, so full citywide electricity restoration would take until November 11.

Some heartbreaking stories have emerged from the storm.

Two brothers, aged two and four, were swept from their mother's arms in the floods as the family tried to escape the rising seas in Staten Island in the New York suburbs.

Glenda Moore's car became stuck in the water and she was carrying the boys to seek help when they were swept away, the New York Post said. Police said they were still looking for the boys, Connor aged four and Brandon aged two.

Others victims were electrocuted or drowned in flooded basements. A growing number of people were killed by poisoning from the fumes given off by diesel generators put into use since the storm.

The Shell oil company said that Sandy triggered an oil spill in the waters off New York and said clean up efforts were under way.

Hurricane Sandy brought devastation throughout the Caribbean before hitting the United States and Canada. The overall death is now at least 157.